Bid to save Nhulunbuy

By Xavier La Canna

Federal Mines Minister Ian Macfarlane says a deal with Rio Tinto Ltd to keep open its Gove alumina refinery is at a sensitive point, but again warned the miner must make a long term commitment to stay in the region.

"I don't want this hand-to-mouth stuff where they keep coming back to the government and asking for more money," Mr Macfarlane said.

"There is no point in us having this conversation again in five years time, and again in five years time after that," he told the ABC.

Mr Macfarlane and NT Chief Minister Adam Giles are heading to Nhulunbuy today to meet with local residents in the town and business representatives.

"The negitiations are at a sensitive stage. I respect Rio's right to decide what they want to do with the refinery," Mr Macfarlane said.

He said the refinery's satellite town of Nhulunbuy risked becoming like the Queensland town of Mary Kathleen, which had its population crash and houses taken away, after a uranium mine was closed in 1982.

Mining giant Rio Tinto runs a huge alumina refinery and bauxite mine in Gove, which most of the people in Nhulunbuy rely on for economic survival.

The miner says it has been losing money from the operation, due to the high Australian dollar, low prices for alumina and because the operation relies on expensive diesel fuel to run.

Mr Macfarlane refused to say how much money the federal government would give Rio Tinto if it agreed to stay in Nhulunbuy, but said any number would be announced publicly once a deal was struck.

The NT government under the leadership of Terry Mills earlier this year struck a deal to provide gas to Rio Tinto to make the refinery cheaper to run, but Mr Giles later said it left the NT too exposed to the possibility of a gas shortage.

Mr Macfarlane today said he expected that in 10 years' time the NT would be "awash with gas", particularly from shale sources.